Coca Cola 2012 10-K, Research Paper Example

The annual report is usually divided into several sections to make it easier for the reader to access the desirable information. Coca-Cola’s (Coke) annual report for the fiscal year has been divided into four main parts, with each part containing different sections. The first part covers sections which provide us with basic introduction to the company. The first section gives us general overview of the business such as scale of operations, geographical concentration, financial strength, products, and marketing strategies. Other sections include risk factors that could have material negative impact on the business, legal issues currently facing the company or that may arise in the near future, and the leadership of the company. The second part of the annual report primarily deals with financial data and analysis. The sections covered in this part include capital structure, financial statements such as income statement, balance sheet, and cash flow statement, accounting principles used in preparing the financial statements, and company’s control mechanisms. The third part primarily deals with sections such as management and leadership of the company, executive compensation, and board of directors etc. The fourth and final part is the shortest component of the annual report and contains such information such as a list of important sections within the annual report, and definitions/explanations that may help the reader better understand the annual report (Coca-Cola, 2013).

Even though the company’s sales and net income figures during 2012 were better than 2011, the performance was quite disappointing as compared to the year 2010. Coke’s net income was higher in 2010 than 2012 even though the sales revenue in 2010 was about three-fourth the 2012 level. A closer study reveals that both cost of goods sold as well as marketing expenditure has significantly increased over the last few years which may be a sign of economic recovery as well as more intense competition with Pepsi. This may also be why we note in the balance sheet that there was a significant decline in cash reserves between 2011 and 2012. We also note a notable increase in loans and notes payable during the same period which also explains declining profitability as compared to 2010. Despite growing competition, the company took steps to further expand its scales of operations as evident by higher levels of capital investment during 2012 as compared to previous two years. This is especially evident in the investing section of the cash flow statement.

As far as primary assets are concerned, Coke’s largest long-term assets are property, plant, and equipment at about $14.48 billion and goodwill at a little over $12.2 billion. This is not surprising because Coke has one of the most valuable brands in the world and the nature of company’s operations requires huge capital investments in buildings and manufacturing equipment. In addition, the company also owns part of its global distribution network. The company’s largest short-term assets are cash, cash equivalents, and short-term investments at a little over $13.4 billion. This may be due to the fact that the company requires significant short-term liquidity to conduct its day-to-day operations.

As far as company’s internal control system is concerned, the management reports its regularly conducts internal audits and management reviews and also carefully selects and trains qualified personnel. But the management also states that no internal control system can prevent all instances of unethical behavior or misstatements and there is also a possibility that the severity of risks exceed the effectiveness of the internal control system.

Reference

Coca-Cola. (2013). Form 10-K. Atlanta, Georgia: The Coca-Cola Company.